Finnish clean energy firm Fortum on Friday said it has agreed to sell a 54% stake in its solar power company in India to UK Climate Investments and asset management firm Elite Alfred Berg for about $176 million (€150 million or Rs 1,191 crore).

UK Climate Investments is a joint venture between Australia's Macquarie and the UK Government’s Department for Business, Energy and Industrial Strategy (BEIS) with a binding commitment of £200 million from the UK government's International Climate Fund.

UK Climate Investments will own 40%, while Elite Alfred Berg will hold a 14% stake in Forum's Indian unit, which operates four solar power plants in the country. Elite Alfred Berg will have the option to buy up to an additional 16% from Fortum, the latter said in a statement.

The total capacity of the Indian portfolio is 185 megawatts (MW). Fortum said it will continue to retain a significant minority stake in the solar power company and continue to provide operation and maintenance services based on a long-term agreement.

As part of the €150-million transaction, Fortum will divest 54% stake on a debt and cash-free basis, including de-consolidating its minority part of the net debt. The partnership also covers future solar projects in India, the statement said.

The positive impact on Fortum's results from selling part of the solar portfolio will be about €20 million, the Finnish state-run utility said.

The transaction is subject to regulatory approvals in the European Union and is expected to close in the beginning of the third quarter of 2018.

The stake sale will free up capital for Fortum to make further investments and to continue to utilise its key competencies to develop, construct and operate solar power plants in India, according to Kari Kautinen, senior vice-president, M&A and solar and wind development at Fortum.

“This project demonstrates the growing maturity of India’s secondary market for renewables – creating an environment in which private investors have the confidence to invest in new greenfield projects that will accelerate the de-carbonisation of India’s economy," said Richard Abel, managing director of UK Climate Investments.

Fortum, which started operations in India in 2012, initially acquired a 5MW solar power plant in Rajasthan and went on to win government-run reverse auctions, which included solar projects in Rajasthan and Karnataka.

India has a target of setting up 100 gigawatts (GW) of solar and 60GW of wind energy capacity by 2022 as part of the government’s efforts to reduce dependence on coal-fired electricity.

Soon thereafter, last October, UK Climate Investments teamed up with British solar energy firm Lightsource to jointly fund the development of large solar power projects in India.

As part of the venture, UK Climate Investments said it will own 49% of the equity for the construction of Lightsource’s 60MW project in Maharashtra. UK Climate Investments will also provide money for a broader partnership to help Lightsource create a portfolio of as much 300MW solar power projects.

The deal to buy majority stake in Fortum’s India assets will add to the operational solar power assets for Macquarie.

Macquarie is one of the world’s largest infrastructure asset managers, with over $100 billion in assets across real estate, agriculture and energy sectors.

In 2009, Macquarie had started its infrastructure fund in India, along with the State Bank of India.

Since then, it has deployed about $2 billion in the infrastructure sector through the Macquarie-SBI Infrastructure Fund and SBI-Macquarie Infrastructure Trust. It has also been investing from MAIF I since 2014.

Through its joint fund with SBI, the PE firm had invested Rs 880 crore in MB Power Madhya Pradesh Ltd, a special purpose vehicle of Hindustan Powerprojects Pvt. Ltd, in 2010, according to VCCEdge, the data research platform of News Corp VCCircle.

The same vehicle had also backed Soham Renewable Energy through an investment of Rs 25 crore in 2015, besides acquiring a stake in Ind-Barath Energy Utkal Ltd for Rs 780 crore ($122 million).